Global| Jun 26 2008EMU Orders Post Surprising Strength in April
Summary
The pecking order is disturbed EMU orders are yet another example of enigmatic E-zone data. Country level performance is really uneven and this month the strongest economy (Germany) is showing the weakest results as EMU orders show [...]
The pecking order is disturbed
EMU orders are yet another example of enigmatic E-zone data. Country
level performance is really uneven and this month the strongest economy
(Germany) is showing the weakest results as EMU orders show unexpected
strength. Can we believe it? I don’t think so.
Volatile orders with incongruent results
EMU orders have become volatile first of all and that argues against
making any hasty judgments about trends. After a flat February and a
1.3% drop in March, orders have SURGED in EMU in April rising by 2.5%.
This is with MFG sales rising m/m by 0.1%, 0% and 0.1% in each of the
past three months. Moreover the gains are in intermediate goods the
most strongly and secondly in capital goods. But capital goods strength
is suspect as a trend since Germany dominates that category and in
April German orders fell for the third month in a row.
Results of Biblical proportions: the first shall be last and
the last shall be first
France and Italy are showing the greatest order strength over the past
three and six months and this simply not a believable result as German
orders have contracted. It is simply not credible as a trend, only as a
fluke.
Domestic orders greatest in countries where domestic stress
has been among the highest?
The order breakdown for the Zone shows that domestic orders are holding
up the best, rising by 4.8% in April as foreign orders fell by 0.5%;
Over three months foreign orders are off at a 6.6% pace, over six
months they are down at a 1.4% pace. Meanwhile over that period EMU
domestic orders have accelerated.
Too much of this report simply fails the credibility test
This is not a believable pattern. Domestically consumption has been
hurt across the zone and banking sector problems linger. If the
external sector is showing collapsing orders the EMU domestic economy
will be having trouble as well. There may have been some domestic
programs ion Italy and France that have sustained demand early in the
second quarter, but it is nothing fundamental. In both of those
countries the consumer sector is challenged and services surveys have
been withering. It is hard to understand the spurt in EMU orders in
April and that is no reason to believe it especially given the
composition of orders across products and across countries. This is a
report that is best set aside for a while to await revision or more
context.
| E-zone-13 and UK Industrial Orders And Sales | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Saar except m/m | Mo/Mo | Apr 08 |
Mar 08 |
Apr 08 |
Mar 08 |
Apr 08 |
Mar 08 |
||
| E-Zone Detail | Apr 08 |
Mar 08 |
Feb 08 |
3Mo | 3Mo | 6Mo | 6Mo | 12Mo | 12Mo |
| MFG Orders | 2.5% | -1.3% | 0.0% | 4.8% | 4.0% | 2.9% | 3.5% | 6.1% | 2.2% |
| MFG Sales | 0.1% | -0.2% | 0.6% | 2.4% | 7.4% | 5.5% | 5.2% | 4.6% | 4.8% |
| Consumer Goods | 0.1% | 0.0% | 0.1% | 0.8% | 1.0% | 1.4% | 1.4% | 2.4% | 2.6% |
| Capital Goods | 0.4% | 0.4% | 0.7% | 6.2% | 7.7% | 6.1% | 5.8% | 6.0% | 6.2% |
| Intermediate Goods | 4.8% | -2.1% | 0.6% | 13.7% | 3.6% | 6.1% | 5.5% | 7.5% | 2.3% |
| Memo: MFG | |||||||||
| Total Orders | 2.5% | -1.3% | 0.0% | 4.8% | 4.0% | 2.9% | 3.5% | 6.1% | 2.2% |
| E-13 Domestic MFG orders | 4.8% | -2.1% | 0.6% | 13.7% | 3.6% | 6.1% | 5.5% | 7.5% | 2.3% |
| E-13 Foreign MFG orders | -0.5% | -0.8% | -0.5% | -6.6% | 9.7% | -1.4% | 4.5% | 5.5% | 3.9% |
| Countries: | Apr 08 |
Mar 08 |
Feb 08 |
3Mo | 3Mo | 6mo | 6mo | 12mo | 12mo |
| Germany (MFG) | -1.1% | -0.8% | -0.1% | -7.9% | -3.6% | -1.8% | 8.9% | 5.1% | 5.5% |
| France (Ind) | 5.2% | -6.4% | 1.6% | 0.3% | -0.7% | 2.8% | -0.3% | 6.6% | -1.2% |
| Italy (Ind) | 1.2% | -0.5% | 2.2% | 12.3% | 18.2% | 6.0% | 1.1% | 6.5% | 4.0% |
| UK (Engineering Ind) | 20.3% | -14.2% | -8.9% | -22.0% | -23.4% | 30.2% | -20.4% | 13.0% | -11.9% |
Robert Brusca
AuthorMore in Author Profile »Robert A. Brusca is Chief Economist of Fact and Opinion Economics, a consulting firm he founded in Manhattan. He has been an economist on Wall Street for over 25 years. He has visited central banking and large institutional clients in over 30 countries in his career as an economist. Mr. Brusca was a Divisional Research Chief at the Federal Reserve Bank of NY (Chief of the International Financial markets Division), a Fed Watcher at Irving Trust and Chief Economist at Nikko Securities International. He is widely quoted and appears in various media. Mr. Brusca holds an MA and Ph.D. in economics from Michigan State University and a BA in Economics from the University of Michigan. His research pursues his strong interests in non aligned policy economics as well as international economics. FAO Economics’ research targets investors to assist them in making better investment decisions in stocks, bonds and in a variety of international assets. The company does not manage money and has no conflicts in giving economic advice.
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